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February 20, 2008

Leadership and Organizational Effectiveness of Ford Motor Company

“This is everything.

It’s heritage.

It’s children’s future.

It’s everything tied up into one.

Failure is not an option.”

- Bill Ford, Jr.

CEO, Ford Motor Company

The global marketplace is faced with different
challenges that affect its overall management and operations. Various pressures
on the internal and external conditions such as the unstable world and local
economies, the workforce, the customers, and even the management itself risk the
success or failure of the organization. In implementing effective management of
a business, regardless of what kind of management strategy is used, the person
who is foremost in all the transactions of the business must be able to deal
with all the potential hazards.

Ford Motor Company is well known as the #1
manufacturing experts in the western world. During Ford's early years, the
company was virtually indistinguishable from its founder. "Fordism," as it came
to be known--a system of mass production which combined the principles of
"scientific management" with new manufacturing techniques, such as the assembly
line--created more than fantastic profits for his company: it literally
revolutionized industry on a global scale within twenty years of its
implementation (Kalliney, 2002).

This paper aims to discuss the
leadership implemented in Ford Motor Company under the administration of Bill
Ford, Jr. and specifically, it sought to answer the following questions:

a. what are the problems he inherits as the CEO
of Ford?

b. What are the adaptive challenges he
recognises?

c. How does he go about projecting the voice of
leadership?

In order to point out the answers to the
aforementioned queries, there is a need to provide brief discussion of the
concept of leadership and its styles that will help to the entire analysis of
the case. The integration of the concepts and the facts from the primary source
will present a comprehensive result of the case analysis. The application of
these theories will be evident to the next parts of the report.

Leadership and Leadership Styles

Leadership is an important aspect of any
organization. For decades, the issue on leadership has been undertaken in
various studies and related discussion. In fact the study on leadership dates
back in 1921 (Hughes, Ginnett & Curphy, 1999, p. 8). Leadership comprises the
aptitude and ability to inspire and influence the thinking, attitudes, and
behavior of other people (Adler, 1991; Bass, 1985; Bass and Stogdill, 1989;
Bennis and Nanus, 1985; Kotter, 1988). Leadership is a process of social
influence in which one person is able to enlist the aid and support of other
individuals in the achievement of a common task (Chemers, 1997). The major
points of this definition are that leadership is a group activity, is based on
social influence, and revolves around a common task. Although this specification
seems relatively simple, the reality of leadership is very complex.
Intrapersonal factors such as ideas and emotions, interact with interpersonal
processes (i.e., attraction, communication, influence) to have effects on a
dynamic external environment.

Among the many definition of leadership, the
most relevant definitions were given by Yukl (2002) and Schein (1992). Yukl
(2002) defined leadership as the process of inspiring other people to comprehend
and agree on what needs to be done and how to accomplish them effectively. In
addition, leadership is also defined as the process of facilitating collective
and individual efforts to fulfill shared objectives.

Alternatively Schein (1992) stated the creation
of culture is the main essence of leadership and that both culture and
leadership are two sides of a single coin. Relating leadership to management,
Schein believed that leaders tend to establish and change culture, while
administrators and managers live within the culture. While both related
definitions differ from one another, both speak of the essential role leaders
have to play in corporate culture.

The charismatic power of leadership has already
been analyzed and challenged (Nadler and Tushman, 1990). Along the process,
leadership has been considered as a vital element of powerful and strong
organizational cultures (Kotter & Heskett, 1992). Leadership has been a subject
of numerous discussions that oftentimes, it is considered as an attribute of
personality, a characteristic of particular positions or behavior attribute
(Katz and Kahn, 1978, p. 574). Clearly, organization culture and leadership have
a strong and established relation. Leadership is vital in applying
organizational culture. The role of the leaders for example, is significant in
developing organizational efficiency and creating corporate culture.

According to Bohn (2002), leaders have the
ability to view the future. They are equipped with compelling abilities to
visualize where things will naturally end or lead to. Unlike other people,
individuals with leadership abilities see things that are not noticeable or
obvious to others. In addition, leaders have the ability to build and establish
confidence to others. Hence, in order to be a good leader, a person needs to
have a personal sense of efficacy and confidence (Bohn, 2002).

Each of these aspects brings complexity to the
leadership process. Somewhere between the broad personality trait and the
specific behavior sits the leadership style. Different styles of leadership that
a leader may follow or may not. Styles reflect relatively stable patterns of
response to social situations. Leadership style refers to the degree of
direction that the leader provides to subordinates in attempting to influence
their behavior toward the accomplishment of organizational objectives (Gibson &
Marcoulides, 1995). The three styles of leadership are the authoritarian
(autocratic) style (Lewin, Lippitt, & White, 1939), permissive (delegative)
style, authoritative (democratic) style (Schriesheim, 1982; Newstrom, 1993).

Authoritarian style (Huffman and Piggrem, 2003)
of leadership states that the leader has the authority over his subordinates.
In this manner the authority have the right to do the decision making without
asking the opinion of the followers. The leader is this type of leadership tends
to tell the followers what must be done in order to achieve the goals or
objectives of the organization. On the other hand, the permissive (delegative)
or the so-called laissez-faire style refers to the kind of leadership
wherein the followers are permitted to be involved in the decision making
process. The leader implements minimal control or manipulation on their
followers. However, the leader is still accountable for the final decision to be
made. Herein, the opinion and ideas of the followers are being valued by the
leader and each follower encompasses different tasks set by the leader. The last
style is the authoritative or democratic style of leadership. In this type of
leadership, the leader and the selected subordinates are involved in the process
of the decision making. Herein, the subordinates have the right to voice out
their ideas and thought which they think would be helpful for the leader in
making the final decision. In this style of leadership the leader is in control
or has the authority for the final decision.

Ford Motor Company

One of the leading transnational
manufacturers of cars and trucks and even one of the principal providers of
automobile financial services, popular modern symbol that affects the economy,
ecology and society (Luke 2001) is Ford Motor Company. Products are produced in
facilities operated by Ford Motor Company and/or joint ventures and Ford itself
is a publicly traded company listed on the New York Stock Exchange. There are
approximately 328,000 employees and has made an estimated 6.7 million vehicles
globally in 2002. There are 25,000 dealers and more than 10,000 suppliers as
business partners.

For the past years, due to some
consequences, the company encountered several challenges. However, with the
efforts of gaining back what was lost, there is a significant development in the
whole organization. William Clay Ford, Jr., popular in his moniker, Bill Ford,
the Chairman of Ford Motor Company, assured that the company would distinguish
themselves excellently by their efforts to make the world a better place. This
is in line with moving the company’s vision from concept to reality. A public
commitment was made to strengthen connection in the society and play a dynamic
part in bringing about the transition to a greater economic, social and
environmental sustainability.

But before the glorious position of the said company in the
marketplace, there were several problems that he needed to face. He underwent
numerous challenges, dealt criticisms – both constructive and destructive in
nature, and the dilemma of proving himself.

What are the problems he inherits as the CEO of
Ford?

“I don’t believe this.” – Bill Ford, Jr.,
on a board meeting

Jacques Nasser’s administration was
toppled due to many negative forces within his management. After leaving the
company, he left big troubles that Bill Ford – the new CEO must tackle
immediately. Among these are the following:

lowest stock recorded in a decade
- $7.15 a share

hammered bonds that leads to junk
bonds

the shocking company’s debts -
$162.2 billion

a shortfall in the pension plans
totaling to $6.5 billion

intense price war in the market

worldwide competition among the
competing industries

internal, suppliers, and human
resources upheavals

external pressures – the state,
economy, and media

low worldwide demands in the car
industry

environmental conditions

customers – needs, satisfaction,
and behavior

What are the adaptive challenges he
recognizes?

“We’ve come back from adversity many times I
the history.

We’re going to do it again…

We started the job; now let’s finish it.”

– Bill Ford, Jr., on a board meeting

BillFord, being a democratic leader, he
recognized the challenges that may hinder and/or allow the immediate solutions
to the existing problems of the company. In order to recover to such
organizational challenges, he studied the roots of the problem and identified
the actions to be done.

Primarily, he took all the risks.
Ford launched an ad campaign that he himself is the model. Then, he planned
extensively. Ford recognized the difference of setting strategy and implementing
it. He helped the hammering out of the turnaround plan that forced the closure
of five plants, elimination of over 35,000 jobs and workers, and cutting of $9
billion cost in the middle of the decade.

The pressures of the situation are
opportunities for him to see his strengths behind those challenges. Further, he
sought the advices, help and reinforcement of his old-timers in which he trusted
very much. Ford is not afraid on strong people. Hence, he firmly believes that
when bright people and brilliant minds work together, a masterpiece will be
created. He reorganized his whole management panel.

In relation to Ford’s line of products, he
noted new innovations in the product development. Further, he met and consulted
environmentalists and worked on the strategies in manufacturing cleaner and
environment-friendly cars. Additionally, he built nonpolluting factories and
turned the organization into a role model corporate citizen.

He visualized the possible problems that the
company will face in the future operations. By facing such challenges, he
relates his predictions to every party concerned. Ford was the first person to
warn the board that they are headed to a great trouble. He took all the risks up
to the extent of sacrificing his own personal commitments – such as evenings at
home with his family and management of his beloved Detroit Lions.

In fixing the gap of the human resources and
upper management, he stepped down the corporate ladder for the sake of mingling
to the ordinary employees of the company. Sometimes he dropped off on the
assembly line to check up and frequently buys his lunch to the cafeteria where
he will casually talk to the people there.

In his management, Ford is not the traditional
command-and-control CEO, according to James Padilla, group VP of Ford North
America. He possesses outstanding qualities and practices. He perfected the act
of good listening. He meets with the executives who are layers below his direct
reports. He also elicits feedback and opinions from all people. Ford forces
debate and discussion. After he overrules an executive, he often calls the
person to personally thank him or her for the job well done. Ford’s dealing with
other inefficient employees in the company is also unique as shown in the
situation of Thursfield, a greedy cost cutter.

All in all, Bill Ford, Jr. found numerous
opportunities in challenges and he adapts them so that he can apply his innate
leadership abilities coupled with his practicality and intellectual expertise.

How does he go about projecting the voice of
leadership?

“I think I am the guy to pull this off… I want
the company to win. If we get into this down the road and it’s not working, I
will be the last person to hang on by my fingerails and fight it.”

-Bill Ford, Jr., on an
interview with Fortune

Ford was the opposite of the ousted CEO Jacques
Nasser who is more into money and power. Rather, he is more into preservation of
the tradition and valuing people. As stated above, his personal qualities and
his knowledge of who and what a real leader is proved his effectiveness. His
voice of leadership is gifted that it can offer hope to risky situations,
motivate every employee, elicit brilliance in performance, and contribute to the
performance of the company.

He is not a pushover. He takes risks and finds
the best and applicable solution for that specified crisis. According to Ford
director Irvine Hockaday, Jr., Ford can talk strategy and vision clearly. “He
has both the credibility because of his name and the ability because of his
style to marshal all those forces and get them, moving forward.” Ford is the one
who can talk to dissatisfied dealers and suppliers in a quick manner possible.

He is very humble. He gets straight away into
matters of significant discussions. He is frank according to Michael Kennedy, a
dealer in Philadelphia. Ford is trying to balance short-term and long-term
objectives without sacrificing one from the other. Optimism is one of his
greatest virtues. Finally, he has a good sense of where he and the whole company
need to go. To quote an director’s comment: “His vision is right. He is willing
to make strong decisions and to bring strong people in around him.”

With these attributes and their practical
applications, Ford projects a voice of leadership that is loved and appreciated
by all people that surrounds him. Aside from being acknowledged, the aftermaths
of such practices and decisions bring benefits to all areas and people
concerned. It is as simple and plain as it is. Granted that he belongs to the
lineage of great Ford past heads, he definitely have good genes.

Up to now, Bill Ford firmly believes that an
improved sustainability performance is not just a requirement but a remarkable
business opportunity for the purpose of putting the company at the top in
driving the transition and to be in a position to benefit from it. His
outstanding leadership and effective management played a very crucial role to
the present market and economic dominances of Ford Motor Company – which he
considered his everything, heritage, children’s future, and
everything tied up into one.